Legal Beagles - Guarding your Consumer Rights

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OFT v BANKS - House of Lords consider appeal

~ Visit the forum for the latest information ~

What has happened?

The Banks appealed the Judgment handed down by the High Court and affirmed by the Court of Appeal. The original Judgment said that banks terms regarding unauthorised overdraft charges were able to be assessed under the unfair terms in consumer contracts regulations(UTCCR 1999). If the disputed terms are found to be unfair the banks would have to repay consumers any charges they have incurred.

Five Law Lords heard submissions from Jonathon Sumption QC and Geoffery Vos QC on behalf of the banks, and Jonathon Crow QC on behalf of the OFT, over the last three days.

This hearing has now concluded and we await the decision from the Law Lords. This is expected to be in October 2009 but could be as early as mid July.

The judgment will decide whether in fact bank charges can be assessed for fairness under the Unfair Terms in Consumer Contracts Regulations.

The OFT (acting for the consumer) are arguing the charges are too high and unfair contract terms. The Banks are arguing that the charges are part of the price of having a bank account and they can charge what they like.

Whats Next ?

It is entirely possible the Banks, or the OFT, will take the case on to The European Court of Justice.

If no further appeal is made and the OFT wins there are still further steps to be taken before consumers can expect to see any refunds.

1) The OFT need to conclude their current investigation into the fairness and level of the terms/charges

2) If they consider the charges/terms to be unfair they will seek voluntary compliance from the banks to a) reduce and b) refund

3) If the banks will not comply voluntarily the OFT will return to Court to request an injunction to force the Banks to comply.

It will only be at that point that consumers will know the process, amount and speed of any refund.

If the OFT lose they will still look at the level of charges under transparency, frequency and competition. This would result in lower future charges or a restructuring of bank accounts although it may not result in a refund to those already claiming.

You can read more about the case in our OFT forum - http://www.legalbeagles.info/forums/...splay.php?f=99 - where there is discussion and reports directly from the Court. We also aim to have the transcripts of the latest hearing within the next couple of weeks.

In the meantime bank charges claims remain on hold, Hardship cases should refer to the Hardship Forum for help. We do not recommend putting business claims in the court system at the moment at all.

Credit card charges claims continue as normal - remember £12 is NOT a fair level.

Keep pressure up on the FSA to monitor the waiver properly.

__________________

OFT v BANKS TEST CASE
Tuesday 23 June – Thursday 25 June

Office of Fair Trading (Respondents) v Abbey National PLC and others (Appellants)
Lord Phillips of Worth Matravers
Lord Walker of Gestingthorpe
Baroness Hale of Richmond
Lord Mance
Lord Neuberger of Abbotsbury

Financial Ombudsman Service Annual review 2009

The FOS and the CMCs -
''We prefer to hear from consumers in their own words''

Walter Merricks states, in the FOS Annual review, ''it is questionable what advantage consumers gain by using such [Claims Management] companies' and shows concerns over the fees consumers pay to them as ''disproportionate to the effort involved especially in relation to the effort or expertise that some claims management companies actually deploy.''

However he does acknowledge that these CMCs with huge marketing drives have assisted consumers in gaining some redress from financial institutions where they otherwise may not have done.

''over half of the complaints we received during the year about payment-protection insurance (PPI) were brought to us on behalf of consumers by claims-management companies.'' PPI claims saw a rise of 191% in the year to the Financial Ombudsman and 89% of these complaints were upheld in the favour of the consumer.

In discussing reform of the PPI legislation and complaints procedures he states one of the aims should be to ''Avoid offering easy opportunities to claims-management companies to take disproportionately large slices of redress belonging to consumers.''

Merricks states Claims companies ''are a symptom of the problem and not its cause''

26% of all complaints made to the FOS last year were bought BY Claims management companies on behalf of consumers - up from 19% the previous year. ONLY 6% were bought by trading standards and citizens advice combined!

The FOS continue to state cases referred by claims-management companies they '' do not think they should need the help of a commercial thirdparty
– such as a claims-management company or solicitor – to bring a complaint to us. We decide cases by looking at the facts – not at how well the arguments are presented. We prefer to hear from consumers in their own words.

And we are a free service for consumers – while commercial organisations charge consumers to bring a complaint on their behalf.''

This frustration with CMCs was displayed in a letter from the FOS to the CMCs in April 2009 - http://www.financial-ombudsman.org.u...-CWletterA.pdf in which they tell CMCs off for not acting correctly or in the consumers best interest.

The FOS also point out that there are no available figures for how the Claims Management Companies are performing in providing a service to consumers.

This needs looking at. The Ministry of Justice regulate the industry and when section 161 of the Legal Services Act 2007 comes into force, claims management services and the Regulator will fall under the supervision of the Office for Legal Complaints and its ombudsman scheme. It has been suggested that the first complaints will not be handled until 2010. For the purposes of complaints only, Claims Management Services are regarded as reserved legal activities and the service regulator as an approved regulator (s. 161).

Consumers do find the complaints procedure frustrating and can be a bit over awed or unaware of the steps they can take once the bank has issued a final response.

However there is a lot of support there for consumers that is accessible FREE of charge, either formal channels such as citizens advice or for speedier assistance and support there are the free advice forums such as Legal Beagles - Guarding your Consumer Rights , MSE, PenaltyActionGroup and others.

These sites carry template letters for customising to use with the banks/card providers and assist with making your complaint to the Financial Ombudsman. You keep 100% of money refunded to you including any additional interest and with the FOS adjudicating in the consumers favour in nearly 90% of cases, there is no need to give a share of YOUR money to a CMC. Three or four stamps and a couple hours of your time is all it takes.

source FOS Annual Review 2008/09 http://www.financial-ombudsman.org.u.../ar09/ar09.pdf and Wikipedia

LATEST - UPDATE 25/5/09 OFT Warn COMPANIES on COLD CALLING >> READ HERE

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